- Pound (GBP) is rising after losses yesterday
- UK GDP rose to 0.7% QoQ
- Euro (EUR) falls after GDP is downwardly revised
- Eurozone Q1 GDP is lowered to 0.3%
The Pound-Euro (GBP/EUR) exchange rate is rising after losses yesterday. The pair fell 0.3% in the previous session, settling on Wednesday at €1.1862. It traded between €1.1851 and €1.1902. At 21:30, GBP/EUR trades 0.26% at €1.1893.
The pound rose against the euro following stronger-than-expected UK GDP data. The UK economy grew 0.2% month on month and 0.7% quarter on quarter in the first quarter of the year, up from 0.6% pretty Manu reading.
However, despite the strong growth in January to March, the UK economy is only expected to expand by 1% this year. Trump’s trade tariffs are expected to slow global growth, while UK businesses are likely to be hit by large rises in employment tax announced in the Labour budget last year.
Still, the US-UK trade deal signed by the sides last week could limit the hit to the UK economy. Under the agreement, the US will reduce higher tariffs on steel and aluminium but will continue to impose the universal 10% tariff on imports of most UK goods.
The Bank of England cut rates this month but supports a cautious approach to further rate cuts, given the sticky service sector inflation.
The euro fell on Thursday after data showed economic growth in the eurozone was downwardly revised. Eurozone GDP expanded by 0.3% quarter on quarter in Q1, which was down from 0.4%, as estimated in April of this year. This was also down by 0.2% growth in the last quarter of 2024.
Of the major eurozone economies, Spain boosted the fastest expansion at 0.6%, while Germany initially grew 0.2%, and the French economy grew just 0.1%. Separate official data showed industrial production growth almost doubled in March as US manufacturers frontloaded orders to avoid trade tariffs.
Industrial production increased 2.6% month on month following growth of 1.1% in February.
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